The Recipe for a Successful Blogging Business: How to Minimize Your Liability

You’ve logged long hours behind the glare of your laptop display, battled writer’s block valiantly, and tried your best not to get rattled by the occasional negative comment or flame war. Along the way, you’ve produced some great content and have joined the growing ranks of more than 175 million blogs worldwide.

While blogging has become a serious industry, most bloggers don’t necessarily consider the business aspects of their blog when they’re just starting out. But soon enough what may have started as a casual interest turns into an extra source of income, or even a full-time business.

If you’re a self-employed or self-starting blogger, you’ve got to be aware of a few things as you navigate the legal and business aspects of your blog.

Liability issues

Yes, I know, it’s hard to imagine that sitting behind a computer can put you at any real risk of a lawsuit. And certainly managing a blog is inherently less risky than managing a sky diving business. However, there are some liability issues to consider: What it you accidentally plagiarize another writer’s work? What if you write about a mobile phone prototype left behind at a bar? What if you’re fined by the FTC or named in a class-action lawsuit for positively reviewing a defective product?

If you’re involved in blogging or social media, you’re most likely aware that back in 2009 the FTC revised their guidelines to bring social media and Internet advertisers into the mix. At the heart of this revision was a concern that recognizing ads in social media was becoming increasingly harder. And since then, we’ve seen a handful of controversies surrounding celebrities not properly disclosing brand relationships.

You need to disclose any ‘material relationship’ with an advertiser or brand. A material relationship can be anything and everything from receiving cash, free samples, a free product, or free trip in exchange for a product review or blog post. Let’s say that Jimmy is an online gaming expert who drinks lots of energy drinks and blogs about his gaming experiences. A game manufacturer sends him a free game and asks him to write about it. Accepting this free game creates a material relationship that must be disclosed or Jimmy can face substantial fines.

If you’re not sure what constitutes a material relationship, err on the side of caution. After all, do you think Jimmy’s readers will be upset to learn he received a free game (particularly, if he’s known for enthusiastic, albeit dead honest, reviews)? Beyond FTC penalties, I believe that disclosure is good practice, as it maintains the relationship of trust that you’ve built with your audience.

It’s no longer acceptable for a blog review to make outrageous claims like “I made $30,000 last month from home selling on eBay; I lost 50 pounds in 2 months.” This is true even if you put a disclaimer ‘results not typical’ in fine print. Like advertisers, bloggers are required to disclose results that “consumers can generally expect.” If you don’t comply, you could receive substantial fines or a consumer protection lawsuit. In most cases, the company itself will be the defendant, but as a participating blogger, you could also be named in the lawsuit.

Step 3: Form an LLC or corporation

Most bloggers aren’t really thinking about business structure when they first start out, meaning that most begin as sole proprietors. While you may think you should incorporate in order to lower your taxes, the main benefit of incorporating or forming an LLC has to do with separating your personal and business finances and minimizing your personal liability.

With an LLC or Corporation (S Corp or C Corp), your personal assets, such as property or a savings account, are shielded from any judgment if your blog happens to be sued or fined. On the other hand, if you’re sued as a sole proprietor, you’ll be sued personally. This means that your personal assets are all at risk. And what you initially started as an interesting side project could end up wiping out your down payment savings.

Also be aware that creditor judgments can actually last up to 22 years. This means that if you’re sued today, your personal assets will still be vulnerable for up to 22 years.

This may sound like scare tactics. And I’m not a fan of scare tactics. But I am a fan of education. Most likely, you’ll never run into any sort of problems with your blog except for the occasional troll. But following this simple recipe of shielding your personal assets through an LLC or Corp, using common sense when choosing your advertising/marketing partners, and always erring on the side of transparency will help make for the sweet success of your blog and business.

Nellie Akalp is a passionate entrepreneur, small business advocate and mother of four. As CEO of CorpNet.com, an online legal document filing service, Nellie helps small business owners form an LLC or incorporate a business in order to start and protect their new business ventures the right way. To access free guides, advice and informative videos on small business legal topics, visit here: http://bit.ly/pChZbV

At next week’s BlogWorld in LA; Nellie will be exhibiting information for attendees to learn the benefits of forming that business structure to a new venture and why it’s an integral part of the success of a business. She will be giving away one iPad2 on November 4th and one on November 5th to BWE attendees. People just have to stop by the booth and look for the ‘Word of the Day’. Once they find it; they need to Tweet to @CorpNet or comment on the CorpNet Facebook page with that word to be entered to win. If they tweet and comment; they are entered twice.